Journal
1 paragraph, 4 sentences
Topic: In your own words, please explain what
economics is and how it affects you in your personal
life.
(You will probably have to do a little research to
find out what economics is. )
Economics
What is Economics?
 Economics – the study of production,
consumption, and sales of products.
 Economy - is how people distribute scarce
resources to produce various commodities
(products) and how those commodities are
distributed for societal consumption
Activity
 What is your own definition of economics.

Share
Impact of Economics

in a stable and expansive economy,
people will spend more and have
more jobs opportunities

in an unstable and slow economy,
unemployment rates will be high
and jobs will be harder to find
 What do you think?

Write down how economics might affect
your future career.
Economic Resources
•
•
Resources are anything used to make goods
or services, also called factors of production
They are scarce and cannot meet all human
wants and needs

human necessities


human wants




include goods and services we cannot live without
include every other type of goods and services we
may want but do not need
examples:
need: open heart surgery
want: liposuction
Four Factors of Production
1.
Land


2.
Labor


3.
human resources
includes all people who work within an economy
Capital


4.
natural resources found on earth
earth or seas
monetary resources needed to start and operate a business
goods used in the production process
Entrepreneurship


involves human skills required to start and run a business
organizes the other three factors to create economic goods
and services
Economic Utility
8
 Is the value added to a product or service by the role
of marketing
 Includes these five types:





time utility
place utility
form utility
possession utility
information utility
Utility means customer satisfaction
Time Utility
9
 Enhances value by having a product or service
available to consumers during a certain time of day,
week, month or year
 Examples include:


stores staying open after 5 p.m. for those who work during the
day
retailers providing gift wrapping during the holiday season
Place Utility
10
 Enhances value by placing products or services in
easily accessible locations for consumers
 Examples include:


banks placing ATMs outside of convenience stores, stadiums,
theaters, etc.
restaurants providing delivery or curbside pickup
Form Utility
11
 Enhances value by creating more useful or desirable
products out of raw materials or separate parts
 Examples include:



grocery stores selling frozen or fresh pre-prepared meals
car manufacturers installing a CD player
in a car
retailers selling bundles of products which complement each
other
Possession Utility
12
 Enhances value by allowing for easy use by consumer
or transfer of ownership to consumer
 Examples include:



retailers providing layaway or financing for large purchases
property owners renting to those who prefer not to or cannot
afford to purchase a home
Forms of payment-cash, credit, lease
Information Utility
13
 Enhances value by supplying consumers with
information
 Examples include:



informed sales staff describing a product’s features and
benefits
advertising informing consumers about a new product
retailers offering a lesson on how to most effectively use a
product
Activity
Journal
1 paragraph, 4 sentences
Topic: What does utility mean in regards to what you
learned yesterday? Please explain 3 of the 5 utilities.
Basic Economic Systems
Capitalism - USA
Socialism – everyone works according to his/her
ability. Everyone is given what he/she needs
according to his/her contribution.
Communism – everyone works according to his/ her
ability. Everyone is given what he/she needs no
matter how he/she contributed.
Capitalism
An economic and political system in which a country's
trade and industry are controlled by private owners,
as opposed to the government, for profit.
Capitalism
an economic system characterized by private or
corporate ownership of capital goods, by investments
that are determined by private decision, and by
prices, production, and the distribution of goods that
are determined mainly by competition in a free
market
http://www.merriamwebster.com/dictionary/capitalism
Capitalism
a way of organizing an economy so that the things that
are used to make and transport products (such as
land, oil, factories, ships, etc.) are owned by
individual people and companies rather than by the
government
http://www.learnersdictionary.com/search/capitalis
m
Basic Principals of Capitalism
Free Enterprise System - An economic system where
few restrictions are placed on business activities and
ownership.
Read more:
http://www.investopedia.com/terms/f/free_enterpr
ise.asp#ixzz27mmjvPZn
Freedom of Ownership
Citizens who live under a free enterprise system are
free to own personal property.
Intellectual property – ideas. You must get a patent in
the U.S. to protect your property.
The use of patented material requires permission from
the owner.
What does this mean?!?!?!?!!?!?!
Example
If you want to make a shirt to advertise something but
you wanted to use a logo, you would have to get
permission.
Please buy
y soup!!!
Competition
This is the fueling force behind the free enterprise
system. Without competition in the marketplace,
there would be no incentive to develop a better and
more of a cutting edge product.
Without competitions we have a
monopolies are bad!
and
Price Competition
The focus of the sale price of a product.
The thought is that if everything about the product is
equal in two different stores, the customer is going to
buy the product that is less expensive.
Nonprice Competition
Quality, Service, Financing
Monopoly
A company with EXCLUSIVE control over a product or
a piece of the market.
Examples: local cable service, local water services,
electric companies used to be
Monopolies are not permitted in free enterprise
because they stop competition.
Risk vs. Reward
 Risk implies the potential for loss or failure.
 Reward is the benefits reaped.
Companies must calculate whether or not the risk is
worth the reward.
What are some examples of taking risks?
Profit
Money earned after an exchange.
Profit = Revenue - Cost
The Role of the Government
Provider of Service
Supporter of Business
Regulator
Competitor
Provider of Service
Also, the
government is
responsible for the
social welfare
system and
providing
Medicare and
Medicaid.
Supporter of Business
 Disaster assistance - FEMA
 Small Business Administration – set up to provide
educational materials to small business owners for
success.
 Largest consumer of goods (U.S. made) – military
and defense materials.
 Establish trade alliances - maintains relationships
with foreign countries to ensure trade
Regulator - Law Maker
Set up agencies to
protect workers
and consumers.
EX:
FDA
 EEOC
 OSHA
 CPSC

Protect private
property rights.
EX:
Patents
Trademarks
Sherman Antitrust act
(Monopolies)
Competitor
U.S. Postal Service competes with UPS and Fed EX
TVA provides electricity to rural areas in the South,
competes with electric companies
National Parks and Campgrounds compete with
privately owned tourist attractions.
Role of Consumer
Deciding which businesses survive
Determining prices
Business Survival
Consumers keep businesses in business. How?!?!
Socialism
 a transitional stage after the proletarian
revolution in the development of a society from capit
alism to
communism: characterized by the distribution of inc
ome according to work rather than need
 Socialist believe that capitalism oppresses the lower
class
Communism
 a theory or system of social organization based on th
e holding of allproperty in common, actual ownershi
p being ascribed to thecommunity as a whole or to th
e state.